Product Comparisons

Confused about the products available? Need some information on what may suit your business needs?  Compare different finance products and how they may suit your requirements below.

Specific Security Agreement (Chattel Mortgage)Commercial Hire PurchaseFinance LeaseRental Finance
Who uses the product?Used when a business requires ownership of the equipment during and at the end of the term.Used when guaranteed ownership of the equipment at the end of the term is required.Generally used based on accountants advice.Used for financing high depreciating and/or high obsolescence equipment. (Such as IT, security and office equipment).
What is it?You choose the equipment you require and make fixed payments to the Financier over an agreed term. You choose the equipment you require and make fixed payments to the Financier over an agreed term.You choose the equipment you require and make fixed payments to the Financier over an agreed term.You choose the equipment you require and make fixed payments to the Financier over an agreed term.
Term of loanMinimum of 12 months with the maximum term determined by the Financier based on the type of equipment to be financed. Minimum of 12 months with the maximum term determined by the Financier based on the type of equipment to be financed. Minimum of 12 months with the maximum term determined by the Financier based on the type of equipment to be financed. Minimum of 12 months with the maximum term determined by the Financier based on the type of equipment to be financed.
Residual or balloon? (this is the payment required at the end of the term as agreed at the start of the finance arrangement)You determine the balloon value percentage in conjunction with the Broker and the Financier. You can have a nil balloon.You determine the balloon value percentage in conjunction with the Broker and the Financier. You can have a nil balloon.The residual value percentage is generally based on the effective/useful life as determined by the Australian Tax Office*. Not applicable
Who owns the equipment during the term?You take ownership of the equipment at purchase and the Financier takes a charge over the equipment.Legal ownership with the FinancierLegal ownership with the FinancierLegal ownership with the Financier
Flexibility during the term?NoNoYesNo
End of term options?Legal ownership remains with you.Ownership passes from the Financier to You once all payments have been made.You can make an offer to purchase the equipment at the residual value.You are required to return the equipment to the Financier. However, you may continue renting the equipment or place an offer to purchase the equipment, subject to Financier's approval
What can be claimed as a tax deduction?You may be able to claim interest and depreciation as a tax deduction if the equipment is used for business purposes.You may be able to claim interest and depreciation as a tax deduction if the equipment is used for business purposes.You may be able to claim payments and stamp duty (if applicable in your State) as a tax deduction if the equipment is used for business purposes.You may be able to claim payments and stamp duty(if applicable in your State) as a tax deduction if the equipment is used for business purposes.
What is the usual accounting implications?On balance sheetOn balance sheetOn balance sheet.Off balance sheet.
GST implications during the term of the finance option?GST is not payable on the payments or on the balloon value.GST is payable on the term charges (interest). This is payable upfront or may be financed during the term (subject to Financiers approval). GST is not payable on the payments or on the balloon value.GST is payable on each payment and any residual valueGST is payable on each payment. At the end of the term if you make an offer to purchase the equipment and it is accepted, GST is payable on the purchase price

 

 

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*Tax Treatment including the Goods and Services Tax (“GST”) can be a complex area and depends on your individual situation; we recommend that before making any decisions you seek independent advice from your tax adviser.

DISCLAIMER: This information has been provided for illustrative purposes only and does not constitute advice given by your Accountant or Financial Adviser.  To the extent permitted by law, PMG Finance or any related entity does not accept any responsibility for persons who rely on the information contained in the above table.